Much debate on the Iran Deal has centered around the utility of the “snapback” of sanctions in case Iran cheats. There is language in the JCPOA (Paragraph 37)  that has led some to believe that contracts signed before a hypothetical “snapback” would be grandfathered in and allowed to continue as restrictions on new trade would be re-imposed.  The specific text states that “in such event [of snapback], these provisions would not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date of application, provided that the activities contemplated under and execution of such contracts are consistent with this JCPOA and the previous and current UN Security Council resolutions.”

At first look, this language points to a rather large loophole to the snapback provisions. Could Iran frontload trade agreements before violating the JCPOA, thereby gutting any re-applications of sanctions under snapback?

Treasury official Adam Szubin effectively settled this debate today in no uncertain terms by stating, “If sanctions snapback, there is no grandfather clause. Any transactions conducted after snapback occurs are sanctionable. ”

We may surmise that what Szubin means is that although the original contracts would be not be retroactively sanctionable, any new transactions under such contracts occurring after snapback would be sanctionable. Such an analysis would reconcile the text of the JCPOA with the Obama administration’s contention that the snapback provision is a powerful deterrent to any Iranian malfeasance. Neither Iran nor the other members of the P5+1 have addressed their interpretations of this issue, but at least we now know what Treasury’s understanding of the snapback provision is.